12. Share-Based Compensation

Total compensation expense included in SG&A, and the associated tax benefits recognized related to the Company’s share-based compensation plans, were as follows:



	Thirteen weeks ended				Thirty-nine weeks ended
	October 29,		October 31,		October 29,		October 31,
	2016		2015		2016		2015
	($ in millions)
Options and shares purchased under the employee stock purchase plan	$	3	$	3	$	8	$	9
Restricted stock and restricted stock units		3		3		9		8
Total share-based compensation expense	$	6	$	6	$	17	$	17

Tax benefit recognized	$	2	$	3	$	5	$	6
Excess income tax benefit from settled equity-classified share-based awards reported as a cash flow from financing activities					$	16	$	33

Valuation Model and Assumptions

The Company uses a Black-Scholes option-pricing model to estimate the fair value of share-based awards. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility. The following table shows the Company’s assumptions used to compute the share-based compensation expense for awards granted during the thirty-nine weeks ended October 29, 2016 and October 31, 2015:



		Stock Option Plans						Stock Purchase Plan
		October 29,			October 31,			October 29,			October 31,
		2016			2015			2016			2015
Weighted-average risk free rate of interest		1.4	%		1.5	%		0.4	%		0.2	%
Expected volatility		30	%		30	%		27	%		24	%
Weighted-average expected award life (in years)		5.7			6.0			1.0			1.0
Dividend yield		1.7	%		1.6	%		1.7	%		1.7	%
Weighted-average fair value	$	15.71		$	16.07		$	14.04		$	10.20

The information in the following table covers option activity under the Company’s stock option plans for the thirty-nine weeks ended October 29, 2016:



		Weighted-		Weighted-
	Number	Average		Average
	of	Remaining		Exercise
	Shares	Contractual Life		Price
	(in thousands)	(in years)		(per share)
Options outstanding at the beginning of the year	3,694			$	32.62
Granted	500				63.60
Exercised	(1,106)				21.44
Expired or cancelled	(52)				59.38
Options outstanding at October 29, 2016	3,036		5.9	$	41.34
Options exercisable at October 29, 2016	1,990		4.4	$	31.24
Options vested and expected to vest at October 29, 2016	3,002		5.9	$	41.11
Options available for future grant at October 29, 2016	11,968

The total fair value of options vested as of October 29, 2016 and October 31, 2015 was $9 million and $14 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 29, 2016 was $10 million and $24 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 31, 2015 was $25 million and $63 million, respectively.

The total intrinsic value of options exercised (the difference between the market price of the Company’s common stock on the exercise date and the price paid by the optionee to exercise the option) is presented below:



	Thirteen weeks ended				Thirty-nine weeks ended
	October 29,		October 31,		October 29,		October 31,
	2016		2015		2016		2015
	($ in millions)
Exercised	$	19	$	31	$	45	$	96

The total tax benefit realized from option exercises was $7 million and $17 million for the thirteen and thirty-nine weeks ended October 29, 2016, respectively, and was $12 million and $37 million for the corresponding prior-year periods.

The aggregate intrinsic value for stock options outstanding, outstanding and exercisable, and vested and expected to vest (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options) is presented below:



	Thirty-nine weeks ended
	October 29,		October 31,
	2016		2015
	($ in millions)
Outstanding	$	78	$	133
Outstanding and exercisable	$	71	$	116
Vested and expected to vest	$	78	$	133

As of October 29, 2016 there was $8 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options, which is expected to be recognized over a remaining weighted-average period of 1.4 years. The following table summarizes information about stock options outstanding and exercisable at October 29, 2016:



	Options Outstanding				Options Exercisable
		Weighted-
		Average		Weighted-			Weighted-
		Remaining		Average			Average
	Number	Contractual		Exercise	Number		Exercise
Range of Exercise Prices	Outstanding	Life		Price	Exercisable		Price
	(in thousands, except prices per share and contractual life)
$9.85 to $15.10	603	1.9	$	12.70	603	$	12.70
$18.84 to $30.92	460	4.3		25.79	460		25.79
$34.24 to $55.02	787	5.9		40.42	645		39.13
$56.35 to $73.21	1,186	8.5		62.53	282		61.74
	3,036	5.9	$	41.34	1,990	$	31.24

Restricted Stock and Restricted Stock Units

Restricted shares of the Company’s common stock and restricted stock units (“RSU”) may be awarded to certain officers, key employees of the Company, and to nonemployee directors. Additionally, RSU awards are made to employees in connection with the Company’s long-term incentive program. Each RSU represents the right to receive one share of the Company’s common stock provided that the performance and vesting conditions are satisfied. There were 678,466 and 588,308 RSU awards outstanding as of October 29, 2016 and October 31, 2015, respectively.

Generally, awards fully vest after the passage of time, typically three years. However, RSU awards made in connection with the Company’s long-term incentive program are earned after the attainment of certain performance metrics and vest after the passage of time. Restricted stock is considered outstanding at the time of grant and the holders have voting rights. Dividends are paid to holders of restricted stock that vest with the passage of time. With regard to performance-based restricted stock, dividends will be accumulated and paid after the performance criteria are met. No dividends are paid or accumulated on RSU awards. Compensation expense is recognized using the market value at the date of grant and is amortized over the vesting period, provided the recipient continues to be employed by the Company.

Restricted stock and RSU activity for the thirty-nine weeks ended October 29, 2016 is summarized as follows:


			Weighted-
			Average
		Number	Remaining	Weighted-Average
		of	Contractual	Grant Date
		Shares	Life	Fair Value
		(in thousands)	(in years)		(per share)
Nonvested at beginning of year		803		$	45.19
Granted		368			63.80
Vested		(219)			37.68
Expired or cancelled		(125)			39.32
Nonvested at October 29, 2016		827	1.2	$	56.34
Aggregate value ($ in millions)	$	47

The total value of awards for which restrictions lapsed during the thirty-nine weeks ended October 29, 2016 and October 31, 2015 was $8 million and $10 million, respectively. As of October 29, 2016, there was $16 million of total unrecognized compensation cost, net of forfeitures, related to nonvested restricted awards.